Blog, Reimbursement

Top Questions from the Understanding 340B Webinar

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Greg Fliszar, Attorney at Baker DonelsonTim Powell Looking for more information about Understanding 340B? BESLER Senior Reimbursement Consultant, Tim Powell, and Greg Fliszar, Attorney at Baker Donelson, answer your questions from the recent webinar. 

To watch BESLER’s Understanding 340B Webinar, click HERE

    1. What is the difference between the Traditional FFS vs. Medicare Advantage plan? Why would one choose Medicare Advantage plan over the traditional FFS? Is it because MA plans offer more benefits? Or is it required?

      No, it is not required to select a Medicare Advantage plan.  The beneficiary can choose either Fee For Service or a Medicare Advantage plan.

      Traditional Medicare (FFS) vs. Medicare Advantage (MA)

      Traditional Medicare (Fee-For-Service or FFS):

      1. Coverage:

                  – Includes Part A (hospital insurance) and Part B (medical insurance).

                  – Part D (prescription drug coverage) is separate and usually purchased as a standalone plan.

      1. Costs:

                 – Typically, has a monthly premium for Part B and a deductible for both Part A and Part B.

                 – Beneficiaries pay a 20% coinsurance for most services under Part B.

                 – No out-of-pocket maximum, meaning you could face high costs if you require significant healthcare services.

      1. Flexibility:

                 – Allows beneficiaries to choose any doctor or hospital that accepts Medicare.

                 – No network restrictions, making it ideal for those who travel or live in multiple locations throughout the year.

      1. Additional Coverage:

                 – To cover gaps in Traditional Medicare, many beneficiaries purchase Medigap (supplemental insurance).

                 – Medigap helps with costs like copayments, coinsurance, and deductibles.

                 – Prescription drug coverage (Part D) must be purchased separately.

      Medicare Advantage (MA or Part C):

      1. Coverage:

                  – Offers all the benefits of Part A and Part B, and often includes additional benefits such as vision, dental, hearing, and wellness programs.

                  – Usually includes prescription drug coverage (Part D).

                  – Offered by private insurance companies approved by Medicare.

      1. Costs:

                  – Usually, has a lower monthly premium than Traditional Medicare plus Medigap, but may require copayments or coinsurance for services.

                  – Often includes an out-of-pocket maximum, which can limit annual spending on covered healthcare services.

                  – Costs vary significantly depending on the specific plan and provider network.

      1. Flexibility:

                 – Typically operates with provider networks (such as HMOs or PPOs), so beneficiaries may have to see doctors within the network to get the lowest costs.

                 – Some plans offer nationwide coverage or allow seeing out-of-network providers at a higher cost.

      1. Additional Coverage:

                 – Often includes additional benefits like vision, dental, and hearing, which are not covered by Traditional Medicare.

                 – Prescription drug coverage is typically included (but not always, so it’s important to check).

      Why Choose Medicare Advantage Over Traditional Medicare (FFS)?

      1. Simplicity:

                – Medicare Advantage plans combine hospital, medical, and usually prescription drug coverage into one plan, making it easier to manage healthcare needs.

                – There’s typically no need for separate Medigap and Part D plans.

      1. Additional Benefits:

                 – Offers additional benefits like vision, dental, hearing, and wellness programs, which are not covered under Traditional Medicare.

      1. Out-of-Pocket Maximum:

                 – Medicare Advantage plans have a cap on annual out-of-pocket expenses, providing financial protection against unexpectedly high healthcare costs.

      1. Potentially Lower Costs:

                 – MA plans can have lower premiums compared to the combined cost of Original Medicare, Medigap, and a Part D plan.

                 – Some MA plans have $0 premiums, although out-of-pocket costs can vary.

      1. Coordinated Care:

                 – Many MA plans focus on coordinated care, which can be beneficial for beneficiaries with chronic conditions or complex healthcare needs.


      1. Provider Networks:

                 – MA plans often have network restrictions, so it’s important to check whether preferred doctors or hospitals are included.

                 – If out-of-network providers are used, it can result in higher costs.

      1. Regional Differences:

                 – Availability of MA plans and the specific benefits they offer vary by location, so it’s crucial to review options based on where you live.

      1. Changing Plans:

                 – Switching from MA to Traditional Medicare can be challenging, especially if Medigap coverage is desired, as Medigap plans can have underwriting requirements.

      Ultimately, the choice between Traditional Medicare and Medicare Advantage depends on individual preferences, healthcare needs, financial considerations, and how one prefers to manage their healthcare.

    2. One of the criteria to qualify speaks to “granted governmental powers by state or local government.” Can you describe what this would be or how one accomplishes that?

      Non-governmental bodies can be granted governmental powers by state or local governments through a process called delegation of authority. This process involves several steps and legal mechanisms, ensuring that the non-governmental body can perform specific functions typically managed by government entities.

      Here are some examples of how that process might work:

      Legislative Authorization: The state or local government passes legislation that authorizes the delegation of certain governmental powers to a non-governmental entity. This legislation outlines the scope of the powers, the responsibilities of the non-governmental body, and the oversight mechanisms.

      Creation of an Agreement: An agreement or contract is established between the government and the non-governmental body. This agreement details the specific powers being delegated, the expectations for performance, reporting requirements, and any conditions or limitations.

      Some examples include:

      Public-Private Partnerships (PPPs): Governments often delegate powers to private companies to manage public infrastructure projects, such as highways, bridges, and public transportation systems. The private entity may be granted powers related to construction, maintenance, toll collection, and service provision-or run a hospital.

      Quasi-Governmental Organizations: Entities like taxing districts may be granted governmental powers to manage and provide essential services. These organizations operate independently but under strict government oversight.

      Non-Profit Organizations: In some cases, non-profit organizations are granted powers to administer social services, healthcare, or educational programs. The government provides funding and regulatory guidance while the non-profit delivers the services.

    3. If two acute care hospitals merge, or combine into one provider number, how quickly does their combined DSH calculations allow them to prove their new greater than 11.75% threshold? Which SSI would be used for immediate qualification into 340B ?

      When two hospitals merge, the SSI percentage for the DSH calculation will align with the provider number assumed by the merged facilities. The SSI percentage will continue to be calculated using data from both hospitals. Following the merger, all claims will be billed under the new provider number. Medicare will then compare this billing data with the SSA database. However, providers currently have no straightforward way to verify if this process was executed correctly, which might lead them to consider filing an appeal or protesting an item on their cost report.

    4. Seems inconsistent that CMS has not been willing to step in on the 340B payment reconciliation with the MCOS, but they are going to be active in the ADR process?

      Like sequestration, CMS has stated that the 340B payment disputes between a healthcare provider and a Medicare Advantage (“MA”) plan that were discussed in the webinar are governed by the contract between the provider and the MA plan.  CMS is not involved in the appeal/ADR process between the MA plan and the provider.

      An appeal of an MA plan’s 340B payments that were based on the unlawful rate cuts would be to the Medicare Advantage (“MA”) plan. The appeal process is determined by the contract between the MA plan and the provider. The contract will, often in the “Dispute Resolution” section, explain the process and timelines to formally dispute an adverse decision, which may frequently include one or more written appeals/reconsiderations followed by arbitration.

    5. Does the Federal government “subsidize” manufacturers’ costs in exchange for making the discounted prices available to covered entities?


    6. How does Medicare pay MA plans for patient services? Is it based on # of patients enrolled in the MA plan? A per patient or capitation arrangement? Curious in general how the money changes hands between CMS and the MA plans.

      Medicare Advantage (MA) plans, also known as Medicare Part C, are an alternative to traditional Medicare provided by private insurance companies approved by Medicare. These plans cover all Medicare Part A (hospital insurance) and Part B (medical insurance) services and often include additional benefits such as prescription drugs, dental, and vision care. Here’s how Medicare reimburses these plans:

      1. Capitated Payments:

                 – Medicare pays MA plans a fixed amount per enrollee each month. This payment is known as a capitated payment.

                 – The payment amount is adjusted based on the enrollee’s health status, age, and other factors to ensure plans are compensated fairly for higher-risk individuals.

      1. Bidding Process:

                 – MA plans submit bids to Medicare indicating the cost of providing Part A and B services to an average beneficiary.

                 – These bids are compared to a benchmark amount set by Medicare.

                 – If a plan’s bid is below the benchmark, the plan and Medicare share the savings, and the plan must use its share to provide additional benefits or lower premiums for enrollees.

                 – If a plan’s bid is above the benchmark, enrollees pay the difference as an additional premium.

      1. Quality Bonuses:

                 – MA plans are rated on a star system (1 to 5 stars) based on quality and performance metrics.

                 – Plans with higher star ratings receive bonus payments, which they are required to use to improve benefits for enrollees.

      340B Program Expenses and Reimbursement

      The 340B Drug Pricing Program allows eligible healthcare providers to purchase outpatient drugs at significantly reduced prices. While the 340B program is not directly tied to Medicare Advantage, it affects the overall costs and reimbursement processes within healthcare systems participating in both programs.

      Drug Pricing:

         – Eligible providers purchase outpatient drugs at reduced prices and use the savings to enhance patient care.

      Medicare Reimbursement for 340B Drugs:

         – Medicare Part B reimburses providers for 340B drugs at a rate based on the Average Sales Price (ASP) of the drug plus 6%.

      Impact on Medicare Advantage:

         – MA plans contract with providers, some of whom may participate in the 340B program.

         – Often payment for 340B plans in provider/MA contracts is based on a percentage of the Medicare price for those drugs.

         – The reduced drug costs for 340B providers can influence the overall cost structure and reimbursement negotiations between MA plans and these providers.

    7. Medicare ASP schedule already includes the 6% markup correct?

      Yes – The Medicare payment has been set at ASP plus 6% since September 28, 2022.

    8. How serious are they about adding a section to the Medicare Cost Report for 340B info?

      This is hard to say, but remember we were talking about a Senate working group.

    9. So is the 340B Medicare Advantage Plan back pay process to file an appeal?

      Yes, although the appeal would be to the Medicare Advantage (“MA”) plan. The appeal process is determined by the contract between the MA plan and the provider. The contract will, often in the “Dispute Resolution” section, explain the process and timelines to formally dispute an adverse decision, which may frequently include one or more written appeals/reconsiderations followed by arbitration.

    10. Where can i locate the 340B fee schedule?

      ASP Pricing Files | CMS

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